The Brexit Bill? Go to Arbitration.

This article was first published in Briefings for Brexit and we republish with their kind permission.

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Mrs May mocked Donald Trump for suggesting that we ‘sue the EU’. But recourse to law – in this case international arbitration – is the proper and civilized manner of resolving disputes between states.

Boris Johnson has suggested refusing to pay the £39bn Brexit Bill. The EU has responded by saying that this will represent a sovereign default.

The problem for the EU is that it is far from clear that anything is legally owed. A member state’s duty to pay money to the EU arises under EU law. Under Article 50, subject to any withdrawal agreement, EU law ceases to apply when a member state leaves. No withdrawal agreement, no legal obligation to pay. This was the conclusion of a House of Lords select committee.

The House of Lords select committee correctly said that moral obligations were a different matter. This is true. The UK ought to contribute to accrued and contingent liabilities. Pensions, for example, are deferred pay. So the UK should contribute to EU pensions for work done whilst we were a member state.

However, it should be said that the EU has spent the entire negotiation process relying on technical (and probably bogus) interpretations of Article 50 to its own advantage. It has closed down the scope of Article 50 so as to exclude discussions of the future, which those complaining now about “a Blind Brexit” point out should be the heart and soul of exit discussions. The EU, despite saying that it was legally prohibited to even discuss the future, until the UK left, discovered that Article 50 nevertheless permitted it to demand indefinite power over Northern Ireland. It also declared that the UK was legally prohibited to negotiate trade deals until it stopped being a member state, preventing us from preparing for exit, even though agreements coming into force after the UK departed could not possibly conflict with the EU’s common commercial policy. And so on.

So, the UK standing on strict legality is not something the EU can credibly complain about.

That said, there is one simple response that Boris Johnson should give. The EU should agree to arbitrate the UK’s legal liabilities.

We are happy to pay what we owe – morally as well as legally. But Theresa May’s Withdrawal Agreement was never ratified. The debt was never legally accepted. The EU’s Brexit Bill demand remains what it always was: a demand, provisionally accepted by the UK in the hope that the EU would move on to agreeing an acceptable future relationship. In present circumstances, the EU has no moral case for rejecting arbitration. It is a normal means for determining legal disputes. There is nothing immoral in questioning an invoice. Companies dispute liabilities amongst themselves all the time without regarding each other as immoral. The revenue authorities of every civilised country respect a taxpayer’s right to disagree with their assessments and go to law to resolve.

What is the EU afraid of? The answer is that, contrary to Theresa May’s protestations, the EU got everything it wanted except for the removal costs. M. Barnier even boasted about this, as the Guardian reported. The Guardian gave that boast three “crying-with-laughter” emojis, they found it so amusing.

The EU thus has much to lose in arbitration if pushed back to the UK paying only accrued and contingent liabilities. The EU’s demand was that UK had to pay budget contributions until the end of the Budget cycle, even though the UK would have left the EU’s tax base. Under the current Brexit bill, the UK would have to pay for the EU implementing any plans made whilst the UK was a member, even if the EU were perfectly free to change its plans or re-prioritise its expenditure.

This would not matter if it were confident of winning. Instead, as we published earlier this year, the EU has been keen to invent sophisticated legal arguments to declare that no court or tribunal could rule on the Brexit Bill. So it appears that the EU is not even confident that its own court will rule in its favour.

It is to be hoped that Boris Johnson, and all pro-Brexit politicians, press a demand for arbitration — indeed, press it as relentlessly as the EU and Remainers have played back Johnson’s own “cake and eat it” joke.

Press the point until the transparency of the EU’s position is clear to everyone. It can hardly tell the international community that the UK is not paying its debts, when the EU is refusing to do the normal thing the international community does to determine if a debt even exists.

13 Comments

Roger Turner
on June 25, 2019 at 11:28 pm

I seem to remember the Brexit Bill was the first thing that had to be agreed before negotiations could start.It is in effect a ransom for our release from captivity. Trump apparently said at Davos we didn`t go in hard enough, he was correct.Mrs May set out her stall for a “friendly” negotiation, she got it she got taken to the cleaners.
I remember I and some others on here were advocating we submitted a claim for 40 years of fraud on us, any monies the EU thought they were due could be subtracted from that..

In my Building Contract days, often clients included fixed sums payable for weeks overrun at the fault of the contractor, I was taught that judges looked with suspicion on “penalties” an would only deal with “liquidated and ascertained damages”, i.e I believe jackNick002 suggested something similar in his comment earlier on.
Meanwhile its still not too late to submit a “claim

note to moderator what does the box “notify me of new posts via email” mean, If somebody answers our comment are we supposed to get an advice by email, because I certainly haven`t seen any lately, nor any similar advices in comments to my recent letter on the Wainfleet floods

Vivian Evans
on June 26, 2019 at 4:48 am

Hi Roger – ticking that box means you’ll get an email from the site when someone has posted an answer on your comment post.
If you ticked that box and didn’t get notifications, let me know and I’ll raise the issue with our webmaster.

Roger Turner
on June 26, 2019 at 10:54 am

Hi Viv, nice to see you and good morning..
I assume I should also expect an email if it is a reply to a comment I made as well as from a comment somebody else has made on an article I have written and you have kindly printed for me.
I have looked in my email in tray this morning and there is no email advice, I am writing this on my iPad, but I have also opened iCloud in my lap top and necked there is no incoming email from ID too.
While I’m posting I would point out despite ticking the save my name box below, I always have to fill in the boxes with my name,rank,and serial number every time I post, I hope webmaster can help

Vivian Evans
on June 26, 2019 at 11:35 am

Ah – well, seems that a talk with our webmaster is necessary …

Rob Pearce
on June 26, 2019 at 3:37 pm

Viv, can I also add that I’ve been ticking the email notify box, seen someone has replied but had no email about it.
Thanks.

jane4brexit
on June 27, 2019 at 7:51 pm

I used to work in insurance where contracts can be cancelled “ab initio” meaning if a contract has been accepted, based on lies and non disclosure of facts which would have influenced the decision of a prudent Underwriter ie: without “utmost good faith”, then the policy can be cancelled at the moment prior to it starting as if it had never existed and all amounts paid on either side are returned.

This term/principle is used in UK law in other instances and not only for insurance. I am not sure it would apply against our membership of the EU, but it would certainly be worth checking or negotiating on the basis that it does, imagine if we had used it for Brexit, we could have started any later negotiations on the basis that half a trillion £’s were owed to us.

T G Spokes
on June 25, 2019 at 8:53 pm

Arbitration , Compromise………..

Both forms of corruption. Invented to present a veneer of legality. Thoughouly believed in by 8 year olds.

JackNick_002
on June 25, 2019 at 4:14 pm

If the UK really want to “piss on the EU’s fireworks’ then we must demand that in order to challenge the alleged debt they say we owe. The EU should open its books up for the past 46 years, thereby allowing Internationally independent Auditors time to assess this data and prepare a set of factual, more realistic and accurate figures to work from, and which would be legally binding on both sides.

jane4brexit
on June 25, 2019 at 4:00 pm

These two articles by Gerard Batten explain why we do not need to pay EU pensions and how we have paid for them already:

AN INTERESTING ARTICLE, TO WHICH I TAKE EXCEPTION ! ….. First of all Arbitration between UK and EU is the way to resolve financial matters like this, but who would be the Arbitrator ? Both sides have to agree upon this !
It is well known that Mr Barnier knows full well the debt owed to UK, both moral and formal, for this Nation’s actions in WW2. – Should extra detail be required, check Charles de Gaulle’s public comment and speech, made after WW2, where he truthfully said, ”France owes Great Britain a debt it will never be able to repay !”
Now what is all this nonsense about 39 Billion pounds that we should pay to the EU upon leaving ? Does Europe really want to earn this Englishman’s utter contempt ? THE EU WOULD BE WELL ADVISED TO KEEP VERY QUIET RIGHT NOW !

stuart grice
on June 25, 2019 at 2:35 pm

How about the trillion plus in assets we have in the eu and the 100’s of millions in the eu bank which they say we will not get a penny of ?
Iff they insist on a court case we will counter claim and ours will be much greater